France is at last NFT-compatible

Last year the major international art auction operators – notably Christie’s, Sotheby’s and Phillips – took the plunge of embracing the innovative NFT phenomenon. The response was almost immediate with digital works eliciting incredible enthusiasm worldwide and upsetting many of the existing art and art market codes. In terms of geography, sales of NFTs in the art auction sphere were nevertheless concentrated in the United States, which accounted for 93% in 2021, and China (Hong Kong essentially) which generated 6% of the global turnover from sales of “NFTized” digital works.

Meanwhile, auction houses operating in France were unable to participate in the NFT enthusiasm because of a lack of legal clarity. The marketing of intangible goods having no legislative framework in France, it was therefore de facto prohibited. Nevertheless, determined to take part in this innovative market last year, certain French auction houses decided to side-step this legal reality by selling their first NFTs accompanied by physical works. Attaching the digital work to a tangible good allowed them to take their first steps in this new universe and begin testing the market. The Aguttes company thus sold seven works by the New French Touch collective associated with their NFTs for a total of over $550,000, reflecting a nascent but already strong demand.

Fortunately, the auction of intangible property is now enshrined in French law because the French Senate has adopted (at second reading) the addition of intangible movable property to the provisions applicable to public auctions (published in the Journal Officiel on March 1, 2022). France will now be able to catch up!

The Burnt Auction

In Paris, The FauveParis auction house had been trying for months to host a “pure” sale consisting solely of NFTs without backing them to physical works, because, as its Co-founder and Director, Lucie-Eléonore Riveron, explains, “these are works designed on and for screens”.

On 10 March, i.e. before the decree implementing the new law, FauveParis organized a sale entirely dedicated to NFTs – The Burnt Auction – a first in France.

The conditions of sale for this event organized by FauveParis specified that: “In compliance with a restrictive interpretation of Article L. 320 1 of the Commercial Code and pending the decrees implementing the law published in the Journal Officiel on 1 March 2022 authorizing voluntary sales by public auction of intangible assets, the assets sold by FauveParis are works on paper, therefore physical assets, to which are attached NFTs issued on a blockchain (Ethereum or Tezos), i.e. digital works stored on servers”.

But on 10 March, about fifty digital works (photos, 3D animations, videos) were presented on screens or tablets in different formats. Several major signatures in crypto-art were present, including Pak, XCopy, Hackatao and Beeple (whose Everydays: The first 5000 Days fetched $69.3 million at Christie’s last year). However, despite the reputations of their creators, the most expensive NFTs failed to sell with the best result being 28,600 euros for a work by a British artist Brendan Dawes (Here and Elsewhere). Less expensive works by emerging artists engaged in digital art, nevertheless found buyers.

Artists whose works exceeded their high estimate during the “The Burnt Auction” sale:

Yacine AÏT-KACI (born 1973)
Benjamin BARDOU (born 1981)
Stephan BREUER (born 1975)
Hermine BOURDIN (born 1988)
Tom FABIA (born 1992)
LOUIS16ART (born 1982 )

A legislative framework for crypto-assets in Europe

A few days after The Burnt Auction sale, there was a key debate in the European Parliament. One of the questions discussed was an amendment aimed at prohibiting the proof-of-work system used in many blockchains – including Bitcoin and Ethereum – within the framework of the regulation of crypto-assets (MiCA, “Market in Crypto Assets” ) in Europe.

The amendment was finally rejected by the European deputies to the great relief of players in the French crypto-asset ecosystem who feared it would drag Europe even further behind in a hyper-competitive international context.

The text voted by the European Parliament on 14 March sets the very first regulatory framework on the resale and custody of crypto-assets in Europe and paves the way for the text to come into force by 2024.